Ten bid to bowl Nine out

It is understood Ten’s offer values Test and other international cricket at $80 million annually. Photo: Brendan Esposito

John Stensholt

Ten Network has lodged a hefty final bid with Cricket Australia worth $500 million in cash over five years that will put pressure on the network’s ­balance sheet and on incumbent ­broadcaster Nine Entertainment Co.

Nine has four weeks to decide whether it will match the bumper offer under its “last rights” agreement with Cricket Australia. Ten’s offer, which was lodged earlier this week after a four-week exclusive negotiating period, includes $50 million in contra ­advertising over five years and is not expected to make money for the free-to-air broadcaster.

The Ten offer for all Test and limited-over matches and domestic competitions such as the Big Bash League is well above the $45 million Nine paid annually for the past seven years for inter­national matches and the $12.5 million Fox Sports Australia has paid for the Big Bash and other domestic cricket, including the 50-over Ryobi Cup and Sheffield Shield final. Ten is likely to pay about $20 million a year on top of this in production costs.

It isunderstood the offer values Test and other international cricket at $80 million annually and the domestic cricket rights at $20 million. Although Nine still has the right to match Ten’s huge offer, there would be concerns about the cost given cricket attracts about $60 million in advertising each year on free-to-air television. Nine and Fox Sports also now pay about $20 million each year in production costs.

Ten has struggled in the ratings in the past two years due to a string of failed shows. New chief executive Hamish McLennan is said to be keen to secure a major sport to bolster its ­audience.

If Ten’s offer is not matched by Nine, the 2013-14 season, which features an Ashes Test series against England, would be the first not broadcast by Nine since 1977.

A winning bid by Ten would also lock Fox Sports Australia out of domestic cricket, although Ten could still attempt to sub-licence some formats of the sport to other free-to-air or pay television networks.

A Cricket Australia spokesman would not comment on Ten’s offer but confirmed a decision would probably be made in early June. Nine would not comment and neither would Ten.

The Australian Financial Review understands the legal action centres around whether the rights to the Big Bash League and other domestic cricket should be included in Nine’s “last rights” contract.

Cricket Australia has argued they should not be included as the Big Bash did not exist when Nine’s last contract with Cricket Australia was signed in 2005.

If the Big Bash and domestic cricket rights are left out, it would pave the way for the governing body to sell them in a separate deal to Ten, should Nine choose to match the bid for the international cricket rights.

Ten’s exclusive negotiating period with Cricket Australia began last month when it had a $350 million five-year offer accepted by the governing body, after which Ten has upped its offer and started talks on broadcasting logistics.

Cricket Australia’s negotiating team has been led by chief executive James Sutherland, and includes general manager media rights Stephanie Beltrame, legal head Dean Kino and chairman Wally Edwards. It has also been advised by investment bank Credit Suisse.

Having all forms of cricket on free-to-air television will also be a boost for Cricket Australia, even though it had originally hoped to received $25 million annually for the Big Bash.

It is understood Ten will show the Big Bash on its primary channel, but is yet to confirm its plans for the other domestic cricket forms.

The bid also includes digital rights, which Telstra chose not to bid for. Cricket Australia is understood to have received a $2 million bid from Perform Media, which broadcasts National Basketball League matches via the internet, before accepting the Ten bid.

The first Ashes test in Australia begins in Brisbane on November 21. The Big Bash is scheduled for December and January along with one-day and Twenty20 international matches.

Cricket Australia is also set to announce a new major sponsorship deal with Commonwealth Bank, reportedly worth about $50 million over four years.